ALO Law Office- IDT Tax I Arbitration I Litigation
Date: 18.11.2025
CESTAT Delhi Sets Aside Penalties and Confiscation in E-Rickshaw Import Classification Dispute
This Article has been written by Shri Ravi Shekhar Jha, Advocate based in New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com or on his Mobile +91-9999005379.
In a landmark judgment, the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Principal Bench, New Delhi, has delivered a significant verdict in favor of M/s. Soni E Vehicle Pvt. β Ltd., its Managing Director, Professional Exim (Customs House Agent), and its G-Card holder Appellant. β The judgment, pronounced on November 17, 2025, has set aside the penalties imposed by the Principal Commissioner of Customs (Preventive), New Delhi, in a case involving the classification of imported goods.
Background of the Case
The case revolved around the import of various parts of e-rickshaws by M/s. β Soni E Vehicle Pvt. β Ltd., a manufacturer of e-rickshaws since 2013. β The customs department alleged that the company had misclassified imported goods as spare parts of e-rickshaws instead of incomplete e-rickshaws in CKD/SKD condition, which attract higher customs duty. β The department claimed that the company had evaded duty by misclassifying the goods under different Customs Tariff Headings (CTH). β
The Principal Commissioner of Customs (Preventive) passed an order on August 20, 2020, confirming the reassessment of duty, imposing penalties under sections 112(a)(ii) and 114A of the Customs Act, and confiscating the goods with an option to pay redemption fines. β
Key Allegations and Findings
The customs department alleged that the appellant had imported incomplete e-rickshaws in unassembled or disassembled condition, which should have been classified under CTH 8703 (complete e-rickshaws) instead of CTH 8708 (parts of e-rickshaws). The department relied heavily on an office order dated March 12, 2014, issued by the Joint Commissioner of Customs, which outlined the criteria for classifying e-rickshaws in CKD/SKD condition. β
The Principal Commissioner concluded that the appellant had imported incomplete e-rickshaws based on the presence of three essential componentsβtransmission, axle, and chassisβin the import consignments. Penalties were imposed on the appellants, including the Customs House Agent and its G-Card holder, for alleged complicity in the misclassification. β
Tribunalβs Observations and Judgment β
After hearing the submissions from both sides, the Tribunal found several flaws in the Principal Commissionerβs order:
- Misinterpretation of Office Order: The Tribunal noted that the office order dated March 12, 2014, clearly stated that if the motor and two other essential components were missing, the goods should be classified as parts under CTH 8708. β Since the appellant did not import the motor, the goods could not be classified as incomplete e-rickshaws under CTH 8703. β
- Reliance on Unsubstantiated Evidence: The Tribunal observed that the Principal Commissioner relied on the statement of Anuj Sharma under section 108 of the Customs Act and a Chartered Engineerβs report without following the procedure under section 138B of the Customs Act, which requires examination and cross-examination of witnesses. β
- Presumption-Based Liability: The Tribunal held that liability cannot be based on presumptions, such as the number of parts imported being sufficient to assemble a fixed number of e-rickshaws. β The conditions set out in the office order for classifying goods as e-rickshaws in CKD/SKD condition were not satisfied. β
- Extended Period of Limitation: The Tribunal ruled that the extended period of limitation under section 28(4) of the Customs Act could not be invoked for the 13 previous Bills of Entry, as there was no evidence of deliberate suppression of facts with the intent to evade duty. β
- No Misclassification: The Tribunal found that the appellant had correctly described the goods in the Bills of Entry, and the issue was merely one of classification. β Therefore, penalties under sections 112(a)(ii) and 114A of the Customs Act were unwarranted. β
Final Verdict
The Tribunal set aside the impugned order dated August 20, 2020, and allowed all four appeals filed by the appellants. β The penalties imposed on M/s. Soni E Vehicle Pvt. β Ltd., Appellant, Professional Exim, and Appellant were revoked, and the demands for duty under the 13 previous Bills of Entry were also quashed.
Key Takeaways
This judgment highlights the importance of adhering to established guidelines and procedures in customs cases. It underscores that liability cannot be based on presumptions or unsubstantiated evidence and that the extended period of limitation requires proof of deliberate suppression of facts with the intent to evade duty. β
The decision is a significant win for importers, emphasizing the need for fair and transparent adjudication processes. It also serves as a reminder to customs authorities to ensure that their findings are based on concrete evidence and proper interpretation of rules and orders. This case will likely serve as a precedent for similar disputes in the future, reinforcing the principle that classification disputes should be resolved based on clear guidelines and not on assumptions.
Source: CESTAT Delhi
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